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Undereducated and Underserved—Still

Most women are still financially uneducated and underserved, and too few smart women are becoming advisors. What are we doing wrong?

As a therapist, coach and author, I’ve been involved for decades in an effort to educate and empower more women about their financial choices. It’s devastating to learn in survey after survey that women are still behind in virtually all areas of financial planning. Many of them don’t seek financial advice because they feel so overwhelmed and intimidated. Even though women now outnumber men in college, new planners are still chiefly men. Is half the population to be left outside in the financial cold?

One thing we have learned quite recently is that not only are women socialized differently from men as they grow up, but their brains are actually hard-wired differently in some important ways. My February Investment Advisor cover story, “Double Think,” included some gender difference insights from wealth psychology expert Kathleen Burns Kingsbury’s recently published book, “How To Give Financial Advice to Women: Attracting and Retaining High-Net-Worth Female Clients.” For ideas on how advisors can help serve women at all levels of wealth more effectively, and how the planning profession can attract more female practitioners, I interviewed Kingsbury.

Olivia Mellan: As a behavioral change specialist, what do you think financial advisors need to know to build stronger relationships with female clients?

Kathleen Burns Kingsbury: I believe that financial advisors need to appreciate gender differences because women are neurologically wired for connection and socialized to value relationships. Based on that, advisors need to do some different things when prospecting and working with female clients versus male clients.

One thing is that they need to listen to women in the way that they want to be listened to, which can be different from a male client. Women want to share their stories with you; they want you to ask curious questions to learn more about them and their family; and they want to know you have their best interests in mind, to demonstrate that you care. Another thing is that women really want to take some time to build up trust with their financial advisor—they don’t like to be rushed.

Lastly, women want to know how accumulating wealth is going to help them achieve their real-life goals; they’re interested in making a profit, but they want to know what the profit will do for them. It’s a more holistic view than many men, who are often interested in beating the market and beating their friends.

OM: You mentioned the importance of trust. How can an advisor go about building trust with female clients?

KBK: I recommend learning the acronym TRUST, which means being Thoughtful, Reliable, Understandable, Sensitive and Transparent.

Thoughtfulness is remembering the details and letting your female clients know they are more than their assets.

Reliability is saying what you’re going to do and doing it; and also communicating where you are in the process of getting things done.

Understandability means losing the jargon.

Sensitivity means paying attention, not only to what she’s saying, but what she’s feeling about money, her investments and her life plan.

Transparency is being authentic and open about your fees, your biases and what type of client you like to work with.

OM: Research shows that many widows and divorcees fire their financial advisor within a year of losing their spouse. Why is this?

KBK: I believe that the 30% of advisors who retain these female clients have been proactive in developing a trusting relationship with her and her spouse. They have avoided the mistake that many in the industry make, which is to overlook or neglect the female role in family finances.

OM: How can an advisor avoid that mistake?

KBK: The first thing is to make sure that she’s invited to all meetings and knows that she plays an important role. The second thing is to make sure you involve both her husband and herself when it comes to financial decision-making. In meetings, consciously balance what she needs versus what he needs.

Some advisors go above and beyond to spend time connecting with the woman individually. If you play golf with him, why not do something similar with her? You might invite her for a cup of coffee, or offer to meet with her individually, or if she likes theater, offer her two theater tickets for her and her husband or a friend.

OM: Let’s look at the problem that women are underrepresented as financial advisors, compared to men. Why do you think that is?

KBK: Historically, the financial services industry was created for men by men. So the infrastructure, marketing and sales approaches and leadership development were all developed using a male brain. There’s nothing wrong with that, but it leaves out an important piece of the puzzle, which is the female perspective.

I do see that there’s a shift in the industry, with more firms and organizations running women’s initiatives and female leadership conferences. I believe that the next step is to combine what’s great about the male perspective and what’s great about the female perspective, so that there’s a more integrated approach to management as well as client services. Research shows that when both genders are represented on the executive team, these firms are more profitable.

It would be wise for firms to consider having both male and female advisors represented at their firm. This not only helps attract more high-quality female advisors, but it also better serves their clients’ needs.

OM: Do women make better financial advisors than men? What’s your take on this?

KBK: Not necessarily. In the process of writing my book, I had the chance to meet and interview many male advisors who were highly skilled in active listening, building trust and being client-centered. I believe that women are socialized to have some of the skills necessary to be focused on their clients’ needs. However, some men have these skills already and others can develop them. Female advisors, on the other hand, can make the mistake of relying too much on their people skills and failing to communicate adequately their expertise. That’s why I believe there is value in men and women working together, because we have so much to learn from one another.

OM: So how can we start attracting more women to consider financial planning as a profession?

KBK: First, we need to let young women know in college that this is a viable career path that can be very focused on helping and working with clients. We also need to provide these young women with mentors in the field, so they can see how it’s been done. And lastly, we as an industry need to listen to the female perspective and value it as an industry.

OM: What motivated you to write this book?

KBK: As I was traveling the country, speaking to financial advisors, I realized that male advisors needed to be part of the solution when it came to serving female clients better. So I decided to write a book catering to men to help them learn how to connect, communicate and collaborate with female clients, either individually or as part of a couple.

At present, women who work with female financial advisors are much more likely to say they’re extremely satisfied than women working with a male advisor. The difference was 44% to 24% in a Brinker Capital survey last year.

But I believe this is due not so much to a basic preference for female advisors as to the fact that these advisors were more likely to listen to them, understand their needs and help educate them about investing. Both men and women need to understand that financial planning is not primarily about math, numbers and the stock market. It’s primarily about helping clients meet their life goals. An advisor who provides this service in a way that feels safe will attract female clients who stay loyal for life.